Predicting the Weather

What does cloud computing mean for the future of large-scale corporate IT? Will cloud computing evolve into a big, fluffy cumulus, allowing IT to transform from a perceived technology cost center into a strategic business asset? Or will it become a dark, stormy mass signaling the end of corporate IT as we know it?

The truth probably lies somewhere in-between, with large companies likely to apply a hybrid model in which they use cloud computing for noncritical systems and applications, while keeping sensitive apps and data on in-house networks. Before that can happen, they must be convinced that cloud computing holds value for them, and, to date, CIOs at large companies have been reluctant to venture too far into the cloud.

The way Marc West, CIO of H&R Block, sees it, cloud computing at its best offers corporate IT executives the perfect opportunity to break out of their technology shackles and raise their boardroom profile by allowing them to shift their attention from mundane technology matters to issues more strategic to the business. "CIOs are always talking about why we're never at the table, why we're never invited," West says. "If you're waiting to be invited, you'll never be there. Figure out how to spur growth, not just deploy software."

In other words, CIOs need to do whatever is necessary to avoid being considered a commodity. As IT becomes less of a market differentiator, it's not enough for CIOs to oversee effective rollouts, integrations and development projects. Instead, they need to focus their efforts on articulating how to extract the most business value from each new technology. By turning to cloud computing, they can begin to shed themselves of some of the technological burdens that weigh them down.

Others believe that regardless of where the technology resides, businesses will continue to need technologists. The difference will be that IT departments will place higher value on skills like project management, quality assurance testing and business analysis rather than on traditional coding and development skills.

"You still need IT for acceptance testing, configuration and communication with the IT service provider," says Sue Powers, CIO of Travelport, which runs one of several reservations systems used by airlines, hotels and car rental companies. "IT still needs to be involved."

In any case, you'll be hard-pressed to find a CIO who shares the views of Nicholas Carr, the former Harvard Business Review executive editor and current roughtype.com blogger who earned fame--and generated controversy--with his 2004 book, Does IT Matter? Information Technology and the Corrosion of Competitive Advantage. In his follow-up book, The Big Switch: Rewiring the World, From Edison to Google (W.W. Norton, 2008), Carr all but declares the pending death of IT.

"In the long run, the IT department is unlikely to survive, at least in its familiar form," he writes. "It will have little left to do once the bulk of business computing shifts out of private data centers and into 'the cloud.' Business units and even individual employees will be able to control the processing of information directly, without the need for legions of technical specialists."

Carr admits, however, that a time when IT departments no longer exist as they do today is probably 20 years off. Of more concern to IT executives is what to expect over the next five to 10 years. At the very least, they can expect cloud computing providers to beef up the main areas of concern: security and reliability.

Even as his firm contends with those issues, Marc Benioff, the CEO of Salesforce.com who built his company on the slogan "No software," says the distress over the perceived lack of security of the "multitenant" model--in which multiple companies' application instances are stored on the same servers--is overblown. Granted, Benioff has reason to promote such a mindset, but the analogy he uses, comparing cloud computing service providers to the banking industry, has merit.

"If you met a CFO who insisted on keeping the company treasury in a safe in the basement, you'd think that he or she were nuts," Benioff said in an e-mail interview. "Why isn't that money in a secure, internationally accessible system that's reliable and highly available? I think we aren't far away from a similar view toward data and applications."